"It is the function of the vice to keep virtue within reasonable grounds." Discuss? I don't really understand this quote.
Samuel Butler was best known for his satirical work, and I believe that this quote is an example of him being somewhat satirical. I believe that he is using this quote to say that people who are excessively virtuous are as much of a problem as those who indulge in vices to excess.
The quote that you give is preceded by a sentence saying that virtue, if unchecked, would be "insufferable." He is saying that a society that is made up of people who are too serious about being virtuous will be deadly dull and that it would kill itself off just as much as a society that was dedicated to vice.
I suppose you could equate this to the saying "all work and no play makes Jack a dull boy." Butler is saying that all virtue and no vice makes for a dull and insufferable life or society.